Traders placed over $1B in perfectly timed bets on the Iran war • Hacker News Board

Re: Traders placed over $1B in perfectly timed bets on the Iran war

#261

Post by ndsipa_pomu » Wed, Apr 22, 2026, 9:20 AM UTC

crazygringo wrote: post #260

ndsipa_pomu wrote: post #226

Earlier quoted context omitted.

If the prediction markets are supposed to have insider trading, then they should be made illegal.

Insider trading isn't inherently bad. Any wager between two people is always going to contain some informational asymmetry. There are good reasons why insider trading illegal for publicly traded stocks. But those reasons don't translate to prediction markets.

Why don't those reasons translate to prediction markets?

As I see it, insider trading leads to insiders making decisions purely to game the (prediction) markets which means that markets become more erratic and will surely lead to less money being available for companies to grow as investors realise that they are being robbed.

Re: Traders placed over $1B in perfectly timed bets on the Iran war

#262

Post by convexly » Sat, Apr 25, 2026, 7:17 PM UTC

echelon wrote: post #7

What value do prediction markets give to anyone not in the insider trading class? I predict these will be banned when someone finally uses them as an "assassination market".

That claim is testable. The 2026 microstructure work on the Kalshi tape (72M trades, Becker) documented a systematic +1.12% excess return for liquidity providing makers and a symmetric -1.12% for takers, plus a longshot bias where 1-cent yes shares pay -41% EV and 1-cent no shares pay +23% EV. That edge is in the market microstructure layer. A patient maker who never trades the frontpage market makes money on the marginal bidder asymmetry alone.

Akey, Gregoire, Harvie, Martineau (2026) on Polymarket find that the top 1% of wallets capture about 84% of all profits, and that the largest whale wallets are NOT the most sophisticated. Large capital systematically bleeds expected value to small order traders. Reichenbach and Walther (2025) document within-Polymarket skill persistence at the 124M-trade scale, so skill differentials are measurable across users distinct from the insider trading question.

Re: Traders placed over $1B in perfectly timed bets on the Iran war

#263

Post by SergeAx » Sat, Apr 25, 2026, 10:11 PM UTC

slg wrote: post #100

Say whatever you want about the merits of prediction markets. But I just don't see a way those benefits outweigh the societal dangers of these constant reminders that people in or close to power can freely profit from their positions in the ways the rest of the population can't. There's always talk about the dangers of disincentivizing job creators, but what happens when a society routinely disincentives job havers i…

"Prediction markets" are just scams where insiders trade against suckers. So those who are not insiders should understand that their money will be alleviated by insiders, end of story.